Analysis: Calian Technologies (CTY.TO)Posted: July 23, 2012
As you would expect from the company name, Calian Technologies is a Canadian based technology firm which operates in two industries: Systems Engineering and Business & Technology Services (BTS). The company has been in business for over a decade, but they only started issuing dividends in 2003. Even then, the company has managed to increase their dividend every year, along with a special dividend of $1.00/share in 2010. Year over year, their share price CAGR is 14.10% from 2003-2011.
Taking a look at a graph of dividend payouts vs. their dividend payout ratio, they have had consistent dividend increases since 2003. CAGR for dividends is 24.88%, which excludes the one time special dividend in 2010. Their dividend payout ratio has had a range of 17%-56% (highest was in 2011), but they have remained consistently below 60% since issuing a dividend. THe spike in 2010 relates to the special dividend and actually pushed their dividend payout ratio to 102%.
Compare the dividend payout ratio to EPS, and two things are clear: EPS is on a constant upward trend with slight dips, but even with these dips the dividend payotu ratio has stayed consistently low; this shows me that management has taken a measured approach to delivering a constantly growing dividend, but ensuring that the dividend growth does not outpace EPS growth.
Three other indicators I like to take a look at are the P/E ratio, and ROE, illustrated below. ROE CAGR has been 2.85%, which isn’t stellar, but it is still an upward trend. P/E ratio has remained consistently below 15, and while the P/BV has broken 1.5 a few times, the combined P/E×P/BV has still stayed below 25.0.
As of the 2011 fiscal year, Calian had a P/E ratio of 10.1554, P/BV ratio of 2.1275 giving a P/E×P/BV of 21.6056, which is within the range at which I would consider buying a position. However, those numbers are based on a share price of $17.35. Currently (closing of July 20, 2012) CTY.TO is trading at $20.73 on the TSX, which bumps P/E to 12.1338 and P/BV to 2.5420, pegging us at a combined value of 30.8437. This is a touch high; I do like the dividend yield which currently sits at 5.07%, but would prefer to jump in at the sub-$20 mark.
Disclosure: No CTY.TO. As of Sept 2012 I hold CTY.TO.